YAKIMA, Washington, April 17, 2014 (CDFI Connect) — Four years ago, the Office of Rural and Farmworker Housing became a Treasury-certified CDFI.
It’s first move: Putting a CDFI Fund technical-assistance grant to work surveying Yakima County farmworkers.
It's next move: Launching an initiative to create a lending program to help long-time farmhands become farm owners
Fast forward to this year, when ORFH started ADENTRO, a program that offers term loans, revolving lines of credit, and down-payment assistance for startup agricultural enterprises, operating expenses, farmland acquisition and other costs.
ORFH over the years has developed more than 1,500 housing units for 7,500 farmworkers and other rural residents and their dependents. Today, the CDFI remains a robust housing-development presence in Washington State, focusing on rural counties in Central and Eastern Washington, with 250 new units currently in planning and development. ORFH to date has invested more than $150 million in affordable housing in Washington State.
ADENTRO marks a major foray for ORFH into Latino and Native agricultural business development, a sector ripe for investment in the Yakima Valley, which is a major fruit producer.
Juan Aguilar, the CDFI business director for ORFH, spoke last week to CDFI Connect.
What’s the English translation of “ADENTRO”?
“Inside.” We like it because it says, “I want to be ‘inside’ the economic/entrepreneurial circle. I want to be ‘inside’ the business community. I want to be ‘”ADENTRO’”
Does your personal experience inform this initiative?
Yes. My grandparents came from Central Mexico, migrated to Texas in the 1920s, and my mom and dad were born and raised in Texas. In 1946, as two 19-year-old newlyweds and with six other families, they drove north with their belongings packed into trucks (with cattle racks and tarps) because they had heard there was a great opportunity for a lot of work in the Yakima Valley. They had also heard that the people here were friendly. My father established roots immediately. People saw him as a natural leader; he would go to a farmer and say, “You need workers? I have 40 people ready to pick your crop.” I was born in Yakima, and raised and educated in this rich agricultural valley. I come from farmworker stock, and I learned the business aspect of farming as I grew up. I was in banking for 24 years after that—doing all levels of lending. I was recruited by ORFH in August 2012.
What does ADENTRO do exactly?
The bottom line is it helps bring farmworkers closer to ownership by offering small-agriculture lending that is coupled with a 10-module course in finance and business management, and that course is a prerequisite to accessing our ADENTRO capital.
Why not just make loans?
By offering an educational component, we’re giving ourselves a way to mitigate risk and ensure that our borrowers have success. It’s a big transition from being a farmworker to running the operations side. It’s a whole new set of skills. It’s not just being there from 5 a.m. to 6 p.m., it’s being there at night, too, when an owner goes into his or her home office—the kitchen table—and calculates the hours, the payroll, what it’s going to cost to apply pesticides, how to finance repairs or replacement for a tractor that malfunctions. Owning a farm is a 24-hour-a-day proposition.
So you bring the head of a household in for the coursework?
We do more than that. It’s not just the prospective farm-owner who should be taking the classes. At the appropriate time, other members of the family will be attending sessions on business planning and predictive income. A spouse or a child may need to be prepared to be the bookkeeper. The children will attend sessions to help them better understand why you have a thinning season, let’s say. That’s so you don’t have too many buds and end up, by the way, with overly small apples or pears. We take a holistic family approach to the education because these will be family-owned farms.
What’s been the level of interest?
We just graduated our first class on March 19, and we got more than 30 calls expressing interest when we announced it. We vetted that group and narrowed it down to 15, which was our target for the right-size class. Of those, 13 started the class, 11 showed up consistently, and about half of those got through Module 4 or 5, so we had a 50 percent graduation rate. Although some trailed off before they got all the way through the course, we qualified them because their business wasn’t entirely agricultural but they wanted to learn business planning or revenue projection. They wanted a business plan for their auto shop or their construction business or housekeeping service, that kind of thing. As far as farming goes, we qualified two farm-ownership loans as a direct result of this class. It’s a big first step.
Is there a generational demand for this kind of program?
Yes. Two or three generations ago, the agricultural work force up here was made up of non-Latinos who had migrated from places like Oklahoma to escape the poverty of the Dust Bowl. Those were the initial farm laborers. Given the times, being Caucasian and speaking the language meant you had reasonable access to capital, and those workers eventually transitioned into owners. That generation is now starting to retire, and their children are often not interested in farming, they’ve been educated and decided to become professionals. So that leaves a natural opening for this generation of farmworkers, who are typically Latino. It’s a renaissance period for them.
Are you aiming exclusively for underserved Latinos?
Not exclusively. Yakima County is also home to the Yakima Indian Reservation, which includes 250,000 acres of irrigable, fertile farmland. Many of the natives lease their farmland now to non-Native Americans, but they, too, are making a transition. While “ADENTRO” doesn’t necessarily resonate with Native Americans, the concept of training to become small-farm owners does. As we speak, we’re working on a class exclusively for Native Americans. We are also working with the local-food movement to help those smaller-scale growers to connect fresh products to the community through mercados, farmers markets, community-supported agriculture.
Where does the administrative money, the education funding and the loan capital come from?
Originally ORFH was awarded a grant from CDFI-TA for $92,000 to develop a business and training model. We then submitted for a CDFI-FA grant of $650,000 and were awarded $350,000. We approached the Washington State Housing Finance Commission's Program Investment Fund and were invited to submit a proposal, and as a result ADENTRO was approved for a low-interest loan of $750,000 which we’ve combined with the $350,000, so our total investment in Yakima County for this is over $1 million. Our next step is launch our first capital loan fund campaign where we’ll go after other grants and other foundations as well. And this part is very important: We’re going to leverage the Community Reinvestment Act to pursue community-development support from banks that do business here in Yakima County.
How big a pool is that?
Yakima County is home to 15 community, regional, and national banks with 60 bank branches throughout the valley. Their combined deposits total more than $3 billion.
This interview was condensed and edited.
More about ADENTRO here.